Tern PLC: Issue of further convertible loan to Device Authority Limited

14January 2019

Tern Plc (the 'Company', or the 'Group')

Issue of further convertible loan to Device AuthorityLimited

Tern Plc (AIM: TERN), the investment company specialising in the Internet of Things ('IoT'), announces that it has committed a further convertible secured loan of up to US$400,000 to its portfolio company, Device Authority Limited ('DA'). The total funds secured by DA through this loan from DA's existing shareholders, including Tern, are US$531,930.

Tern's commitmentwill be provided in two tranches:60% of the total loan, which will see Tern contribute US$240,000, is payable immediately, taking Tern'stotal convertible loan note position in DA to US$1,940,867. The remaining 40% will be payable by20February 2019,if certain commercial milestones are metby DA. Following this second tranche of investment, Tern's total convertible secured loan note position with DA will be US$2,100,867. The loan is repayable on 30 June 2019, to coincide with the other outstanding loan notesto DA.

In providing this support, DA's shareholders, including Tern, are pleased with the progress that DA continues to make with its partners, including the recent contract secured with a leading medical device manufacturer(as announced on 27 December 2018).

The loan note accrues an interest coupon of 5per cent. per annum and is convertible automatically on completion of an equity fundraising in DA of at least US$2.5 millionwhich is completedbefore 30 June 2019('Qualifying Fundraising'). The conversion will beinto the most senior class of shares issued in the QualifyingFundraising at the lowest fundraising price per share.

If a Qualifying Fundraising is not completed before 30 June 2019, but DA is able to procure an exitfor its shareholders, the providers of the loan can elect to either receive 300% of the principal amount of the loan notes held by themin addition to the accrued interest, or to convert the loan and accrued interest into Class A Preference Shares of DA at a conversion price of £0.036681585 per share.

Providers of this loan to DA will also be issuedwith2.6 warrants for each US$1 of loan notes subscribed for by them (rounded down to the nearest whole number). Each warrant, which is exercisable at any time before 11January2026, provides each warrant holder with the right to subscribe for one Class A Preference Share of DA for each warrant held at an exercise price of £0.036681585 per share.

As at 31 December 2018, Tern had an unauditedcash balance of approximately £1.9 million.

Al Sisto, CEO of Tern, said: 'We are pleased to continue supportingDA given the progress the company has been making with its current and newpartners, includingthe recent contract winannounced in December2018. We are confident in DA's ongoingprogress and lookforward to reporting on its future achievements within the IoT security space.'

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014

Enquiries

TernPlc Al Sisto/Sarah Payne	via Newgate Communications
Allenby Capital (Nomad and joint broker) David Worlidge/Alex Brearley	Tel: [phone]
Whitman Howard (Joint broker) Nick Lovering/Christopher Furness	Tel: [phone]
Newgate Communications Elisabeth Cowell/Fiona Norman	Tel: [phone]